XAU/USD in the Foreign Exchange (FOREX) Market (Part II)

Continuing the review of the gold market in Forex, we will analyze other analysis methods.

XAU/USD in the Foreign Exchange (FOREX) Market (Part II)

Market Trend Analysis FOR XAU/USD in the Foreign Exchange (FOREX) Market

This analysis utilizes a combination of both technical analysis and fundamental analysis. When a trader obtains both signals, they will decide and identify the best time and price for entering and closing their positions in the market. Market trend analyses are usually conducted by traders who are experts and have experience in both the fundamental and technical aspects of the study.

Facts and Challenges in the FOREX Market

Due to the development of technology, the market's popularity continues to increase as it has become more accessible to all individuals worldwide. It is essential to understand and be familiar with several facts and challenges in the FOREX market:

•       The FOREX market operates 24 hours a day worldwide except for the weekends. The U.S. dollar currency dominates the market with approximately 80% of its contribution in the FOREX trades.

•       Minimum capital required – Many FOREX brokers only require a minimum initial deposit of as much as $50 or no minimum or initial deposit to open an account and start the trading activity. This makes FOREX one of the most accessible financial markets in the world, and individuals can easily trade currency pairs of their choice. However, it is essential to understand that putting in less money will limit the returns. Traders can increase their deposits for more flexibility and get slightly higher returns.

•       Buy Low, Sell High – Traders can take advantage of the market fluctuation by purchasing a currency pair at a low price and then selling the currency at a higher price. This can be done under the overbought or oversold condition in the market.

•       There are several types of currency trading platforms to choose from, which includes: Meta Trader 4, Act Trader, Trade Station, and many others. These platforms are software traders use as a gateway to enter the trading markets. Each venue may offer different features depending on the quality of its service.

•       There is a positive yet negative side to the 24-hour changes in the FOREX market. Traders can open a position in the market whenever they want. However, traders do not have complete supervision over the prices, for instance, when they are asleep or doing other activities, as prices constantly change.

•       Internet connection failure – Connection failure is likely to happen and would interfere with the trading activity, such as during an open position, and traders cannot monitor the prices. It should be noted that the trading platforms do not take responsibility for problems like connection failure, which is a significant disadvantage for traders.

•       Volatility – The FOREX market is known to be fast and volatile. This situation becomes one of the disadvantages for the traders as they can obtain profit very quickly but can also lose their money very quickly. Traders must be able to find the most suitable strategy and analysis for predicting future prices.

Opening a Portfolio in Online FOREX Trading

There are several steps for investing in the Foreign Exchange (FOREX) market:

Finding and opening a brokerage account – The first step must be to find a suitable place to hold the foreign currency pair you would like to invest in, and that is a brokerage account. There are several FOREX brokers available such as Hot Forex (H.F. Markets Ltd.), X.M., I.C. Markets (International Capital Markets Pty Ltd), FXTM Global (F.T. Global Ltd), Global Prime Pty Ltd, and many others. Traders can choose one that meets their requirements.

Funding the account – After deciding on a broker, traders can log in to their online account and deposit money based on their country’s currency. Funding can be done by using a credit card, debit card payments, or bank wire transfers, depending on the income the broker accepts.

Acquire access to a FOREX trading platform – Traders must access one. The most used online trading platform, FOREX brokers, supports third-party platforms like Meta Trader 4 (MT4) and Meta Trader 5 (MT5). Traders can download these.

Platforms using their smartphone, laptop, or tablet with an internet connection.

Figure out a strategy – Every trader must conduct educated trading by finding the most suitable design and not just purchase or sell a currency pair based on their intuition. There are several strategies to look for, whether it is based on the type of market analysis used, the time frames, and many more.

Starting the trading activity – Traders can withdraw their trading activity by finding the currency pair they want to purchase or sell and opening a position based on a suitable strategy. It is known that the volatility of the FOREX market tends to be high, which means the price movement can change drastically, and traders would have to consider the risks carefully.

Conclusion

Some investors prefer to take physical possession of gold bullion to ensure they can access it at will. Still, that strategy can be prohibitively expensive once additional costs to transport, store, protect, and trade the bullion are accounted for. Instead, some traders focus on changing gold's current “spot” price based on the cost of the most active futures contracts on the COMEX (Commodities Exchange) in New York. Because these futures contracts are actively traded in a central location daily, they provide the most accurate, up-to-date gold prices.

FOREX.com’s place trading is based on the actual price of gold, not an exchange-traded effect like some other developments. Gold offers diversification from other generally traded demands. The inverse correlation with the U.S. dollar was concealed at length above, and gold has also historically been driven unaided by stock and bond market prices.

However, please be mindful that there is no warranty that it will be linked in the future, and the past version does not suggest future outcomes. Spot gold and silver trading are open 23 hours every day from 6 pm E.T. Sunday to 5 pm ET Friday. Trading is locked from 5 pm to 6 pm E.T. day-to-day. Spot gold and silver trading also track CME vacation closures.